Sunanda Jayaseelan

Triveni Engineering’s board of directors has approved a new arrangement of de-merging the sugar business. Speaking to Bloomberg TV India, Triveni Engineering Vice-Chairman and Managing Director Tarun Sawhney says the arrangement will facilitate strategic partnerships and offer flexibility in raising funds for growth. There is an economic rationale and a cost rationale for having these businesses separate, and this would result in unlocking and maximisation shareholders’ value, he said.

Just give us a sense of timeframe and the rationale behind the de-merger?

First, let me quickly take you through the decision. With the objective of separating the engineering and sugar businesses, which was the essence of the earlier scheme that was in front of the honourable High Court, the board of directors has approved the new scheme, whereby, the sugar business of Triveni Engineering will be de-merged.

The rationale is three-pronged. The first is to bring focussed management orientation, with respective areas of specialisation in each business. Second, of course, is to facilitate an environment where opportunities for strategic partnerships and flexibility, whether it be for fund raising or future growth, can be capitalised upon in an independent structure.

Third, there is an economic and a cost rationale for having these businesses separate. And, there is also a fourth rationale, which is, unlocking and maximisation of shareholders’ value.

Now with respect to the timeline, we will be putting up the entire scheme of arrangement with the exchanges in about a week’s time. At that point of time, the timeline will be made very clear.

But let me just say that it is in the interest of the management and the board of the company that this process happens as quickly as possible. Clearly, there are permissions that are required from the stock changes, SEBI and the creditors.

It is an open secret that the sugar industry overall hasn’t been doing well for the past few years. So do you expect an up-tick in revenue margins of your engineering business once this de-merger is completed?

Well, sugar businesses in the last three-four years have suffered not just in north India but across the country.

However, given the Centre’s focus on this sector, in terms of pushing ethanol and enhancing export from the country, we are seeing robust sugar pricing. And, going forward, I think we will have a very healthy sugar business.

It will take some time for the industry to recover from the debt burden. But the start has certainly been made and we are looking forward for some exciting times ahead for this industry.

As far as engineering business is concerned, I had reported that at the end of the last quarter, we had outstanding order book of ₹772 crore, over 40 per cent increases quarter-on-quarter. So we are seeing the momentum picking up. Clearly, on the water side, a lot of it is execution. There is lumpiness in the execution of water contracts in the country. More business must be generated in the industrial and municipal sectors, and then we will see superb growth trajectory. It is a product that requires a lot of attention.

Water is very much our future and we are heavily invested in that industry.

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